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A close look at that assessment notice could be worth tens of $1,000s to your bottom line

If you operate a business in Ontario you pay property taxes. Mark Oct. 18 on your calendar. That’...

John ClarkIf you operate a business in Ontario you pay property taxes. Mark Oct. 18 on your calendar.

That’s when Ontario’s Municipal Property Assessment Corp. (MPAC) will mail out commercial property assessment notices for its 2017-2020 cycle.

If this feels like déjà vu all over again, it’s of course because you should have received your residential assessment over the summer.

Your mouse is starting to drift toward the next article in the RENX newsletter, isn’t it?

Granted, this can be dry stuff, but bear with me. If you find the intricacies of Ontario’s property assessment system Byzantine and boring, consider it from the perspective of paying thousands, even tens of thousands, too much in tax.

It does happen. If it didn’t, I’d have to be doing something else for a living.

In fact, It’s been common in previous assessment cycles for thousands of property owners in Ontario to successfully appeal their assessments for $15 to $20 billion in total reductions.

It’s only to be expected that details can fall through the cracks. MPAC has more than five million properties to manage, with an estimated total value of $2.3 trillion. This makes it the largest assessment jurisdiction in North America.

That’s a lot of real estate to assess and classify. MPAC does deserve a nod for its efforts in recent years to become more user friendly and customer focused, with new online tools for looking up your property and comparing it to other similar properties in your market.

You wouldn’t cut your competition a cheque, would you?

But still, things slip through. So when that assessment doc arrives in the mailbox in October, take the time to give it a close look.

Start this review from the right perspective. The overarching principal is one of equity – how does your assessed value compared to similar properties in your neighbourhood?

If you are not being assessed fairly in relation to your competition, you are incurring operating costs they are not. In fact if you’re over-assessed, you are, in reality, directly subsidizing your competition with a cash donation.

Start with the basics

– Look for obvious errors in your lot size and the information on your building size. Your assessment notice will include a secure username and password you can use to log into the MPAC website for more detail on your file.

– Check how your property has been classified in relation to how you actually use it.

– Use that online MPAC database to compare changes in your assessed value to other comparable properties in your market. A notable difference is obviously a red flag.

Understand how property taxes work

The assessment on the notice you receive is not a fact. It’s MPAC’s opinion. An increase in your assessed value does not automatically translate to an increase in property taxes, while your property taxes can still rise even with no change in your assessed value.

Let’s say you own a retail property that sees an increase in its assessed value. That increase is five per cent, the same as the average for all comparable retail properties in your market. For you, the assessment increase is tax neutral – your property taxes will not go up as a result of this increase.

But say your assessment has gone up by 10 per cent – twice the average. This is going to sting you on your tax bill. Now the onus is on you to carry out your due diligence and ensure this higher-than-average increase is warranted, and not the result of an error.

But there is one additional variable – property tax increases by your municipality to pay its bills. If city hall decides to raise taxes, your taxes payable are likely to rise regardless of any change in your assessed value. There’s not much you can do about that, beyond just making sure the assessed value of your property is fair and equitable so city hall’s increase doesn’t pinch your bottom line any more than it has to.

What to do if you dispute your assessment

You have until March 31, 2017, to file an appeal or request for reconsideration. If you believe you have grounds for an appeal, don’t wait to file it. With Ontario’s current system, appeals can take months, even years, to address.

If your appeal is successful, you will be refunded whatever property tax you are found to have paid in excess. But this is still operating capital that is tied up for the duration of that lengthy process. These amounts can add up. In one case I saw, it was just under $2 million.

So when that assessment doc arrives in the mail in October, take the time to look it over, check the facts, and see if the value seems reasonable.

To discuss this or any other valuation topic in the context of your property, please contact me at I am also interested in your feedback and suggestions for future articles.

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